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  • Short Term Vacation Rentals Vs Long Term Rentals

    May 25, 2017
  • Short Term vs Long Term Vacation Rental

    For the past year we’ve been more focused on investors who wish to buy rental homes in Orlando. One of the questions we always get is. “Is it better to rent short term or long term in terms of return on investment?”

    In this article I’ll be addressing the pros and cons of both scenarios.

     

     

    Long Term Rentals: The PROS

    Consistent Cash Flow

    In a long term rental scenario, you can count on the renter to pay you the same amount of money every month. This is a constant cash flow every month as opposed to renting to a vacationing family who will only be there for a few days or a week. When you own a short term vacation rental, the cash flow is typically really good during the high tourist season and much less during the low season.

    The benefit of owning a rental home in Central Florida as opposed to other vacation destinations is that there really is no low season.

    Renter pays the utility bills

    The location of your vacation rental will determine how high your utility bill will be. For example if your vacation home is in the Rocky Mountains, your electric bill can get quite high in the Wintertime. Just as if your vacation home is in Florida the same would be true in the summertime. Typically, a long term renter agreement makes the renter responsible for paying the utilities.

    You don’t need to furnish it

    In a typical long term rental agreement, the tenant is responsible for furnishing the home. If you have a short term rental it must be fully furnished and move-in ready.

     

     

    Long Term Rentals: The CONS

     

    Less use of your vacation home

    Investors usually buy a vacation where they enjoy vacationing themselves so they can use it a few weeks out of the year. However, if you have a long term renter in place it will be more difficult to schedule any time for yourself.

     

    Difficult to check on the house

    Long term renters are protected by laws which force the landlord to provide prior notice to inspect the home. Usually, it can take anywhere from 3 to 10 days to get approval to inspect.

     

     

    Short Term Vacation Rentals: The PROS

     

    More Personal Use

    When you own a short term vacation home you can choose to block out any dates during the time when you and your family will want to visit. You and your loved ones will have a lot more time to enjoy using the vacation home if you take the short term approach.

     

    Less Wear and Tear

    Vacation homes with short term tenants will sit vacant a certain percentage of the year so there should be a lot less were and tear on the home. People like to eat out when they’re on vacation so the kitchen appliances will also last much longer also. Having a good property management company is key in keeping your vacation home in great shape.

     

    Higher Rental Income

    Generally speaking, you’ll be able to charge more for short term rentals than renting long term. Although the rental income isn’t consistent with short term rentals, it could possibly make you even more money when you compare the annual income on both.

     

    Short Term Vacation Rentals: The CONS

     

    Having to constantly upgrade

    Today’s vacationer expects to stay in nice place where they can feel good and relax. In order to charge top dollar for your vacation rental, you need to make it as nice as possible and constantly upgrade it. From the furniture to the TV’s and appliances and even the mattresses… today’s vacationer has high expectations for the places they want to stay when they’re on vacation.

     

    Marketing Your Vacation Home

    If you hire a quality property management company, they’ll probably get your house rented as much as you want. However, if you choose to market the home on your own you will have your work cut out for you. There are several sites you can submit your short term vacation rental to like Airbnb.

     

    Those were just a few pros and cons of both short term and long term rentals. A good rule of the thumb that has served me well as a realtor and investor is if you rent long term, try to find something close to where you live so you can keep an eye on it. If you rent short term, look for a vacation home in an area where you and your family enjoy visiting.